SIGN UP AND GET YOUR FREE

Selling it overseas.

Nov 13

Most of the companies in the Standard & Poor’s 500 (S&P 500) Index have reported third quarter earnings per share (EPS), which is the profit earned per share of stock outstanding during the period. Many have done quite well.

With more than 90 percent of companies reporting, the total EPS growth rate for the S&P 500 has exceeded expectations, reported FactSet. In aggregate, the growth rate accelerated from 3.1 percent on September 30 to 6.1 percent last week.

It’s interesting to note companies that sell more products and services outside the United States experienced significant increases in EPS when compared to companies that sell more at home. S&P 500 companies with:

More than one-half of sales in the United States had an aggregate growth rate of 2.3 percent.

Less than one-half of sales in the United States had an aggregate growth rate of 13.4 percent.

The disparity owed much to the weaker U.S. dollar and faster economic growth in other countries, including emerging markets.

Investors weren’t all that appreciative of strong corporate performance. They rewarded positive EPS surprises less than average and penalized negative EPS surprises more than average. On November 10, FactSet explained:

“…it may be due to the high valuation of the index relative to recent averages. As of today, the forward 12-month P/E [price-to-earnings] ratio for the S&P 500 is 18.0… Prior to the month of October, the forward 12-month P/E had not been equal to (or above) 18.0 since 2002. Thus, despite the number and magnitude of positive earnings surprises in recent quarters, the market may be reluctant to push valuations even higher in aggregate.”

Last week, major U.S. stock indices ended their multi-week winning streaks and finished lower.

While we report market data week in and week out, we also like to remind you that we think the most important factor in long-term financial success is your actions – not market movement!

* These are the general views of Jonathan DeYoe and they should not be construed as investment advice for any individual.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indices referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The original “Weekly Commentary” was prepared by Peak Advisor Alliance. Jonathan DeYoe is a member of Peak Advisor Alliance and adds, subtracts and edits before publishing.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Jonathan K. DeYoe is the president of DeYoe Wealth Management in Berkeley, CA, the author of Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend, and the founder of Happiness Dividend. Happiness Dividend is a blog offering educational content and tools. The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which financial choices and which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Financial Planning and Investment Advice are offered through DeYoe Wealth Management, Inc., a registered investment advisor doing business as Happiness Dividend. All performance referenced anywhere on this website is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Original content written by Jonathan K. DeYoe, PEAK Advisor Alliance, and Broadridge Advisor Solutions (copyright 2017). The Happiness Dividend crew selects and edits all content with permission and care before you see it here. There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.Disclosures